Malaysian committee to study Forest City project

Kuala Lumpur

MALAYSIA said on Tuesday a committee would review the US$100 billion Forest City real estate project, a day after Prime Minister Mahathir Mohamad said foreigners would not be granted visas to live there.

Dr Mahathir's comments were a setback for Chinese developer Country Garden Holdings as it tries to revive faltering demand in the project on Malaysia's southern tip.

"We will form a committee to study and review whatever terms that were agreed to previously," Housing and Local Government Minister Zuraida Kamaruddin said at a press conference.

"We will engage with all the agencies involved and also the developer. Then we see what is the best way forward," the minister said, according to a recording of the press conference.

Shares in Hong Kong-listed Country Garden, China's largest property developer by sales, fell as much as 3.5 per cent in early trade on Tuesday following Dr Mahathir's surprise announcement.

The Forest City project, which is envisaged to eventually house 700,000 people on reclaimed land near Singapore, has faced uncertainty since Dr Mahathir's coalition won a shock victory at a general election in May.

The project, along with several other infrastructure mega-projects backed by Chinese money, became fodder for Dr Mahathir's election campaign when he tapped into public displeasure over a perceived over-dependence on Chinese capital.

Country Garden Pacificview, a joint venture between Country Garden and the Johor state government to develop Forest City, said in a statement on Monday that Dr Mahathir's comments "may have been taken out of context".

The company said Mahathir had responded positively during a meeting two weeks ago with Country Garden chairman Yeung Kwok Keung, and that the company has complied with all necessary regulations in developing the project. REUTERS